Rupee Starts On A Weak Note, Hurt By A Re-Energised Dollar On US Rate Hike Risks

By | August 8, 2022

Rupee Today: Rupee starts on the backfoot on dollar’s sharp rise

The rupee started on a weak note early on Monday, tracking a re-energised dollar after blockbuster US jobs data pushed expectations for a bigger-sized Federal Reserve rate hike, hurting global risk assets.

Bloomberg quoted the rupee last at 79.4788 against the greenback, after opening weaker at 79.4475 from Friday’s close of 79.2413. The currency traded between 79.4238 and 79.5375 per dollar.

PTI reported that the Indian currency fell 22 paise to 79.46 against the US dollar in early trade.

After strong US jobs data on Friday raised hopes for more aggressive Federal Reserve policy tightening, the dollar extended its best climb versus the yen since mid-June, helped by higher Treasury yields.

The dollar index, which compares the greenback’s value to six other currencies, was at 106.77, a touch below its high of 106.93 on Friday, which was also its highest level since July 28.

The probability that the Fed will hike rates by 75 basis points in September is currently 73.5 per cent, up from about 41 per cent before positive payrolls data on Friday sparked concerns that wage growth would exacerbate inflationary pressures.

“This key (US jobs) data point is a million miles from a current recession, both on a change of employment, and a levels of unemployment basis,” Alan Ruskin, global head of G10 FX strategy at Deutsche Bank, told Reuters.

“Data like this will further any thoughts about ‘US exceptionalism’ and is very positive for the USD against all currencies.”

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